Are Board Members Employees Or Independent Contractors? Exploring Their Classification

Do members of a corporation’s governing board, known as directors, qualify as employees? According to statutory definitions, directors are categorized as non-employees. This clarification was made on July 13, 2023. Directors, who play a crucial role in shaping a corporation’s strategic direction and decision-making processes, are distinct from the regular employees of the company. This distinction is important to understand the roles and responsibilities within the corporate hierarchy.

An Outside Director, often referred to as an independent director, is an essential member of a company’s board of directors who holds a unique position as they are not affiliated with the company as an employee or stakeholder. Instead, these individuals bring an objective, external perspective to the board. Outside directors receive compensation through an annual retainer fee, which can include various forms of remuneration such as cash, benefits, and stock options. Their independence from the company’s management and ownership interests helps ensure a more impartial decision-making process and enhances corporate governance by reducing potential conflicts of interest.

The term “employees of the board” refers to individuals who have been appointed to various roles and responsibilities in relation to the operations and functions of the Board. These individuals are crucial in ensuring the smooth functioning of the Board’s activities, and they encompass a diverse range of roles, such as administrative staff, executives, advisors, and specialists, all working collectively to support the Board’s mission. These employees play a vital role in facilitating decision-making processes, providing expertise, and managing the day-to-day affairs of the Board. In essence, they are integral components of the organization, contributing their skills and knowledge to help the Board achieve its objectives effectively.